He, however, did not express any opinion on the optimal amount of reserves which the RBI should hold.

While the central banks globally hold 14 percent reserves, the RBI keeps around 27 percent of its capital as reserves. Reduction of capital reserves to global level could free up to Rs 3.6 lakh crore.

There was a stand-off between the RBI and the Finance Ministry over several issues, including easier funding norms for the MSME sector, implementation of the capital adequacy norms and economic capital framework of the central bank.

Commenting on the tiff, Fitch Ratings Director (Financial Institutions) Saswata Guha said there are differences between the central banks and governments across the world.

"Differences between the central bank and government authorities are nothing new. I do believe that central banks require autonomy and I don't see any strong evidence that suggests that the same has been compromised in RBI's case.

"Such instances are not unique to just India but are/were visible between central banks and their respective governments globally," Guha said.

The RBI board in its Nov. 19 meeting decided to set up an expert committee to decide on the capital framework, the membership and terms of reference of which will be jointly determined by the government of India and the RBI.